Powerline has a post that is near and dear to my heart, “An Insurance Death spiral?” He highlights that maybe the most serious problem facing the Affordable Care Act may come from spiraling insurance subsidies. Since I have not found anyone with a good understanding of 2013 insurance costs I would not be surprised if the 2014 budget severely underestimates the subsidy costs. If the government is paying the bulk of the bill then it makes business sense for insurance companies to jack up the 2nd lowest silver cost plan as much as they can get away with. That assures that even people like me get a subsidy. I understand why this makes political sense but it also makes controlling health care costs a moot subject. Here is my comment:
Thanks for the post. I was wondering who was paying the subsidy and why. As an example I am paying $391 per month right now for what I call a bronze plus plan. The lowest exchange price for a bronze plan for me is a little above $1,000 per month. The exchange calculated subsidy is $522 per month. So the insurance company is going to get an extra $87 from me and $522 from the government for a policy that is not as good as the one I have in 2013. This sure sounds like a sweet deal for the insurance companies and a real risk the government will get stuck with an out of control entitlement program. Maybe someday in the future we will look back at these days and laugh about the times when we could buy health insurance without a subsidy.